RBA Shows Investment Confidence, Doubts on Consumer as Rate Held

Australia central bank showed increasing confidence in the investment picture outside mining while retaining concerns about the prospects for household spending as it kept interest rates at a record-low 1.5 percent.

“The bank’s forecasts for growth in the Australian economy are largely unchanged,” Governor Philip Lowe said in a statement Tuesday. “The outlook for non-mining business investment has improved, with the forward-looking indicators being more positive than they have been for some time.”

“One continuing source of uncertainty is the outlook for household consumption. Household incomes are growing slowly and debt levels are high.”

“Wage growth remains low. This is likely to continue for a while yet, although the stronger conditions in the labor market should see some lift in wage growth over time.”

“In underlying terms, inflation is likely to remain low for some time, reflecting the slow growth in labour costs and increased competitive pressures, especially in retailing.”

Australian dollar buys 76.90 U.S. cents at 2:56 p.m. in Sydney compared with 76.81 before the decision.